Profile of Hong Kong

Topics: Hong Kong, Economy of the People's Republic of China, Economics Pages: 134 (24860 words) Published: November 25, 2013
Country Profile Series

Hong Kong
In-depth PESTLE insights

PESTLE Country Analysis Report: Hong Kong
© MarketLine. This report is a licensed product and is not to be photocopied




ML00002-039/Published 10/2012
Page 1

This profile analyzes the political, economic, social, technological, legal, and environmental (PESTLE) structure in Hong Kong. Each of the PESTLE factors is explored in terms of four parameters: current strengths, current challenges, future prospects, and future risks.

Key findings
Hong Kong's governance system remains stable, but increasing public agitation is a concern The system of governance has remained stable in Hong Kong, despite apprehensions expressed during Britain‟s handover of the region to China. The "one country, two systems" model has worked well, with limited intervention by the Chinese government. Although Hong Kong does not have complete self-rule, in all but critical matters like defense and foreign policies the responsibility for decision-making lies with the Hong Kong authorities. However, there have been protests by the public against the government. On July 1, 2012, the occasion of the 15th anniversary of the return of Hong Kong to Chinese rule, there were demonstrations by 400,000 people protesting against the glaring income inequality. The number of households where no-one is working increased by 48% to reach 420,000 during 2006–11. According to Census and Statistics Department data released in June 2012, there was an increase in the Gini coefficient of Hong Kong from 0.533 in 2006 to 0.537 in 2011. There was also mass agitation against the government regarding the introduction of patriotic education in the school curriculum in 2012, and it being made compulsory by 2015. The idea of compulsory patriotic education was eventually dropped due to popular opposition. The possibility of people heading back to the streets to protest remains a concern. Increasing economic ties creates new opportunities, despite Hong Kong's vulnerability to external factors The free trade agreement (FTA) between New Zealand and Hong Kong came into effect in January 2011. An FTA was signed between Hong Kong and the Member States of the European Free Trade Association, namely Iceland, Liechtenstein, Norway, and Switzerland, on June 21, 2011. This is Hong Kong's first FTA with the European economies. The agreement between Hong Kong, Iceland, Liechtenstein, and Switzerland came into effect on October 1, 2012. The FTA between Hong Kong and Norway will come into effect on November 1, 2012. The agreement covers trade in services and goods as well as investment and other issues such as protection of intellectual property. Furthermore, the agreement is in line with the provisions of the World Trade Organization. Furthermore, an FTA was also signed between Chile and Hong Kong as part of the ceremonies of the 20th Asia Pacific Economic Cooperation summit. Such bilateral agreements will work as a catalyst and increase the volume of trade and investment. However, Hong Kong‟s trade-dependent economy is vulnerable to external shocks, and weak global demand growth in 2012 will continue to put pressure on economic activity in the territory. Furthermore, with the economy very open to trade, the export of goods and services accounts for around 200% of GDP, which makes the economy vulnerable to fluctuations in the global economic scenario.

PESTLE Country Analysis Report: Hong Kong
© MarketLine. This report is a licensed product and is not to be photocopied

ML00002-039/Published 10/2012
Page 2

Hong Kong's human development performance is impressive, but the government’s low expenditure on healthcare is a cause for concern
Hong Kong performed impressively on various parameters of the United Nations Development...
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